Section 387: Dating of prospectus and particulars to be contained therein
This section is for regulating the issuance of prospectuses for foreign companies in India, requiring them to contain specific information and comply with certain conditions.
The section, clause by clause
What the section says
In plain terms
(1)No person shall issue, circulate or distribute in India any prospectus offering to subscribe for securities of a company incorporated or to be incorporated outside India, whether the company has or has not established, or when formed will or will not establish, a place of business in India, unless the prospectus is dated and signed, and—
A prospectus offering securities of a foreign company must be dated and signed, and contain specific particulars such as the company's constitution and incorporation details, as well as the address in India where these documents can be inspected.
(1)(a)contains particulars with respect to the following matters, namely:—
(1)(a)(i)the instrument constituting or defining the constitution of the company;
(1)(a)(ii)the enactments or provisions by or under which the incorporation of the company was effected;
(1)(a)(iii)address in India where the said instrument, enactments or provisions, or copies thereof, and if the same are not in the English language, a certified translation thereof in the English language can be inspected;
(1)(a)(iv)the date on which and the country in which the company would be or was incorporated; and
(1)(a)(v)whether the company has established a place of business in India and, if so, the address of its principal office in India; and
(1)(b)states the matters specified under section 26:
provisoProvided that sub-clauses (i), (ii) and (iii) of clause (a) of this sub-section shall not apply in the case of a prospectus issued more than two years after the date at which the company is entitled to commence business.
(2)Any condition requiring or binding an applicant for securities to waive compliance with any requirement imposed by virtue of sub-section (1), or purporting to impute him with notice of any contract, documents or matter not specifically referred to in the prospectus, shall be void.
Any condition that requires an applicant to waive compliance with the requirements of the prospectus or implies they have notice of unseen contracts or documents is void.
(3)No person shall issue to any person in India a form of application for securities of such a company or intended company as is mentioned in sub-section (1), unless the form is issued with a prospectus which complies with the provisions of this Chapter and such issue does not contravene the provisions of section 388:
A form of application for securities of a foreign company cannot be issued in India without a compliant prospectus, unless it is for a bona fide underwriting agreement.
provisoProvided that this sub-section shall not apply if it is shown that the form of application was issued in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to securities.
(4)This section —
This section does not apply to prospectuses or application forms issued to existing members or debenture holders, or to securities that are uniform with those already listed on a recognised stock exchange, except that the prospectus must still be dated.
(4)(a)shall not apply to the issue to existing members or debenture holders of a company of a prospectus or form of application relating to securities of the company, whether an applicant for securities will or will not have the right to renounce in favour of other persons; and
(4)(b)except in so far as it requires a prospectus to be dated, to the issue of a prospectus relating to securities which are or are to be in all respects uniform with securities previously issued and for the time being dealt in or quoted on a recognised stock exchange, but, subject as aforesaid, this section shall apply to a prospectus or form of application whether issued on or with reference to the formation of a company or subsequently.
(5)Nothing in this section shall limit or diminish any liability which any person may incur under any law for the time being in force in India or under this Act apart from this section.
This section does not limit any liability that a person may incur under Indian law or this Act.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. Ins. by Act 1 of 2018, s. 78 (w.e.f. 9-2-2018).
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.